Wednesday, 1 August 2012

Bitcoinica is still out of action, with the postings growing more and more angry and fedup with the pace of development. We really hope that Bitcoinica can be back in action and all funds are allocated to the correct customers. It is a very interesting part of Bitcoin and hopefully it will continue to be a very interesting part of Bitcoin.

Tuesday, 31 July 2012

Btc-E was hacked which is another blow to the Bitcoin project as Btc-E is one of the more popular exchange. I loved to use Btc-E especially it gave a lot of choices of crytographic currency. It seemed that someone fraudulently entered a lot of USD and buy up the value of the Bitcoin until it spiked to over US$90. The situation is still unfolding. Best Wishes to Btc-E, may it resume operations asap.

This is a recommendation taken from the popular Bitcon forum:

1. Sell ALL USD immediately. There is definitely not enough USD to pay out.2. Withdraw ALL BTC
immediately. Unless fractional reserve or cold storage was employed,
there should be enough. This is confirmed by one of DeathAndTaxes's
experiments.3. Change passwords for other websites immediately. The database is likely to leak, if a SQL injection was the culprit.

Sunday, 15 July 2012

Please help me.I have 24,841 bitcoins on deposit with Bitcoinica.I have provided them with my full and complete account history including every transaction since day one.There is no question as to exactly how much I am owed. (I'm happy to provide proof to other trusted entities)I have patiently been asking for them for my money back for months, but they have refused to return even a single Bitcoin to me.

I'm a core Bitcoin proselytizer. I'm responsible partly or in full for:

There are on and off requests to dismantle Deepbit, not because it is no good but because it is too good and attracted too many of the miners until their share of the hashing power is dominant. As we know those who control more than 50% of the Bitcoin hashing power has the ability to manipulate the entire Bitcoin, once in a while there are talks in forums or suggestions to dismantle Deepbit. IMHO I do not think it is fair. Yes I do favor a pool that has lesser hashing power so that it will not be a threat to the Bitcoin. What I suggest is the rest of the pool operators improve upon their services so as to capture more hashing powers from the Deepbit pool rather than ask for Deepbit to be dismantled.

Sunday, 1 July 2012

Do upgrade to the latest Bitcoin Client 0.6.3, and it is always a good practice to backup your wallet during the upgrading.

Bitcoin version 0.6.3 is now available for download at:
http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.6.3/
This is a bug-fix release, with no new features.

CHANGE SUMMARY

==============

Fixed a serious denial-of-service attack that could cause the
bitcoin process to become unresponsive. Thanks to Sergio Lerner
for finding and responsibly reporting the problem. (CVE-2012-3789)
Optimized the process of checking transaction signatures, to
speed up processing of new block messages and make propagating
blocks across the network faster.
Fixed an obscure bug that could cause the bitcoin process to get
stuck on an invalid block-chain, if the invalid chain was
hundreds of blocks long.
Bitcoin-Qt no longer automatically selects the first address
in the address book (Issue #1384).
Fixed minimize-to-dock behavior of Bitcon-Qt on the Mac.
Added a block checkpoint at block 185,333 to speed up initial
blockchain download.

Sunday, 24 June 2012

Below is Bitconica Post Mortem, we the Bitcoin Community certainly awaits its return! Best Wishes to Bitconica!

The hacker was successful able to access an email server. This
gave the attacker access to info@bitcoinica.com which in turn allowed
them to reset passwords with our hosting provider, Rackspace. From
there, they were able to change root passwords, steal the private keys
of our hosted bitcoin wallet, and compromise our online database.

In the past, Bitcoinica has been victim to the poor security
practices of an irresponsible hosting provider. In this case, the fault
was entirely ours. Specifically, here's how things went wrong:

1) We had too many bitcoins in our online wallet.
In light of past experiences you might say this is
inexcusable. You would be right. Our practice was to keep online
balances to a minimal amount by periodic transfer to offline storage.
However, this was a manual process and the online balance could grow
quickly and unpredictably from user deposits. We should have had an
automatic process or an alert system to prevent the online wallet from
growing too large. Indeed, that was planned, but it didn't happen soon
enough.

2) Access control and server security did not get the proper attention
Since administrative email accounts can receive password reset
links from Rackspace, the administrative contact should have been a
secure email address, it was not. Access to this email account should
have been limited to administrative personnel.

3) We did not retain needed expertise fast enough
As many of you know, Bitcoinica began as a small project by a
solo founder. The advanced trading experience that Bitcoinica brought to
the world would not have been possible without Zhou Tong's brave
innovation. In light of rapid growth, it was prudent to bring in a
larger team with diverse technical specialties, including security. This
occurred officially last month when the Bitcoinica Consultancy team
stepped in as managers and operators of the business. A transition
period ensued. A new platform was conceived which would strengthen
Bitcoinica in the long term but took focus away from the present system
in the short term. The recent security breach was not beyond our team's
skills to prevent. We know better. But we did not address relevant
issues as quickly as was needed.
So, what are we going to do about it?
We are choosing to leave Bitcoinica offline until such time as a
new platform can be built and tested with security best-practices
built-in from scratch. We do not yet have a firm estimate for
availability but it will most probably be measured in months.
We will set up a process in the short term for users to withdraw
their funds. Further details will be provided once we determine the
best approach.
We thank you in advance for your patience. And we humbly apologize for this incident.

Friday, 1 June 2012

It seemed that the issue grew more and more serious. As at now, they are saying that the hackers used social hacking methods to hack their servers. One worse thing I am looking at is that the owners are keeping Bitcoinica offline until their better platforms are tested and made available.

It is such a great pity, I used to put Mtgox and Bitcoinica at the same level, both seems to be helping the Bitcoin grow, hopefully it will not be too long even we see Bitcoinica back up and stronger than ever.

Tuesday, 15 May 2012

I feel that the owners of Bitcoinica and its administrators should have regular blog posts or twits on what is happening so that the users of Bitcoinica can be kept up to date. Being aware of what is happening and what is being done does give the users more relief and trust in Bitcoinica.

Monday, 14 May 2012

The Bitcoinica issue is not solved yet. And honestly speaking how it will be solve will help implications on the reputation of Bitcoin. I really hope that it can be solved with proper compensation for those involved and that a full account of what happened be published.

Friday, 11 May 2012

Bitcoinica is one of the major forex exchange of Bitcoin, similar to the world of Forex outside. Today the owner Zhou Tong, one talented individual who singlehandedly found the web site had taken down the site as he had found something suspicious and feel that it is safer to take the site off line while doing investigations. Wishing the Best for Zhou.

Monday, 7 May 2012

I would say that we handled currency notes and coins so often that without handling them, we do not feel comfortable. It is true that credit cards and cash storage cards reduced the usage of money notes and currencies. But to most of us, we still want to feel a coin or two. Casascius coins are laser engraved with the Bitcoin information and are physically available. Some of the collectible Casascius are actually in gold and silver, really a collectible item by itself. So for those interested in Bitcoin but want to feel the physical presence of Bitcoin, do try to order one!

The Casascius Coin are uniquely designed for Bitcoin. It is backed by real Bitcoins. The "private key" is on a card embedded inside the coin and is protected by a tamper-evident hologram.
The hologram leaves behind a honeycomb pattern if it is peeled. If the hologram is intact, the bitcoin is good. At the moment it is a collectible item, but I hope that as time passes more and more people will make use of the coin for transaction purposes. Kudos to Casascius for giving us such a beautiful physical form of the Bitcoin. Some description as well as the lovely photos above and below are being provided by Casascius Coin for illustration purposes.

Lets discuss what makes a dollar worth a dollar or rather the value of that dollar. Previously such currencies were backed by precious metals such as Gold. US$1 may be worth a certain amount of Gold and using precious metals to back the dollars allow some value to be assigned to the dollar. But nowadays all money are in Fiat, they are not backed by precious metals but rather by the promises of the governments issuing the currencies.

Bitcoin makes use of the concept of work. It assumed that computational work is of value and that computational work was done to mine the Bitcoin. The Bitcoin assumption was valid as till now despite hacking and large ups and downs of the Bitcoin, it still retain a value. At the moment it is about US$5 to 1 Bitcoin, meaning that people or investors are valuing the work done to mine each Bitcoin at US$5. This is how the Bitcoin derived its value.

For those using Windows Vista or Windows 7, I think that the easiest to use mining software will be that of the Guiminer. It has a very simple graphic interface with extensions and commands for those who are more experienced. You basically can't go wrong with using this as it is just click and play with a lot of the more popular mining pools' configuration already inbuilt. Strongly recommended for those who are just starting out.

Bitcoin is an extremely innovative currency. But innovation does not mean that it is automatically adopted especially by the economies that are already totally controlled by Fiat Money. Bitcoin is also not dominated by Geeks, we have a lot of thoughtful Economists and Idealists who are trying their very best to bring Bitcoin mainstream. Some of them are spending their time as well as Bitcoin to promote the usage of Bitcoins to the major organizations such as donating to these organizations in Bitcoin hoping that they will realize the advantages and adopt it. With the efforts of all, geeks, economists and everyone involved in Bitcoin, I am sure that Bitcoin will be successful.

I think this should be of interest to Bitcoin speculators and investors for their reference. Priceonomics value Bitcoin at $10 each. But at this moment the main exchange Mtgox is trading Bitcoin at a narrow range of about $5. Of course those holding long positions on Bitcoin will certainly wish that Bitcoin reaches $10. I for one hope that Bitcoin prices will appreciate so that more and more miners come in and more and more awareness generated on Bitcoin and more and more users use Bitcoin!

Thursday, 3 May 2012

Bitcoin adopters are super innovative group of people. Look at this Bitcoin Exchange. They have actually launch an Exchange similar to those of New York Stock Exchange, but powered by Bitcoins. This exchange allows users to setup IPO, sell and buy shares etc. As efficient as any Exchange. The most important thing is it allows Bitcoin users to attract investments to their Bitcoin project and hence grow their project as well as Bitcoin.

You can see that you can own shares as we as get funding for your projects, interesting and innovative right? It is certainly not easy to setup an exchange. Some examples you may be interested in:

Wednesday, 2 May 2012

Buying Bitcoin is relatively safe if you are buying from those big exchange like Mtgox. The smaller exchanges are also quite reliable. If you are doing an exchange with an anonymous person, the danger lies with them because when they send out Bitcoins it is irreversible, but you can charge back your credit card or Paypal. Of course you are facing the same dangers of chargebacks if you are selling Bitcoins. For this it is 100% safer to go through the exchanges.

Tuesday, 1 May 2012

I think I have given an introduction on Bitcoin, how to install the client and how to start mining. But is it time to invest in Bitcoin rigs to start mining? Granted that normal computers can no longer do effective mining. It will take customized Bitcoin rigs or FPGAs given the current difficulty. Is it time? You can use a Bitcoin Calculator to decide for yourself. My opinion is, given the current difficulty, a lot will depend on the availability of cheap electricity for yourself. Buying FPGA is a heavy investment, but you can get relatively cheap boards with PCI-e 16 and also go to Ebay to buy some cheap GPUs to start mining. Second hand stuff will cost much more reasonably and to allow you to proceed with the mining without incurring heavy costs.

Sunday, 22 April 2012

Bitcoin being a product of technology faces far greater dangers from hackers than normal currency would face. Bitcoin is not just vulnerable on the technology front where it has to upgrade constantly with new patches and versions to improve and combat threats. Another front where it is vulnerable is that 90% of the Bitcoin Exchange trade is done through Mtgox. An attack on Mtgox would cause tremendous tremors to be felt in the Bitcoin Community.

This happened on 19 Jun 2011 when hackers attacked Mtgox and transferred 25,000 Bitcoins were transferred from 478 accounts. The attempts to sell the stolen coins plunged Bitcoin to 0.01 cents. Bitcoin prices recovered subsequently but the incident does show the vulnerabilities.

A nice Youtube explaining more in detail about Bitcoin. There are a lot of people still apprehensive about Bitcoin, it is still difficult to get and also not many merchants accept it. But I guess the same as for all innovations, it takes time for the mass to adopt it.

Saturday, 21 April 2012

Given the extremely high difficulty of Bitcoin mining now, it may take months before an individual mining rig manage to solve and receive a block of 50 Bitcoins. Therefore sites started to appear which pool together the hashing power of the individual rigs so as to combine them for Bitcoin mining and based on the hashing power, each time a Bitcoin block is solved, the 50 Bitcoins are shared among the miners. Therefore payouts are much more frequent especially in the bigger Bitcoin Pools.

Bitcoin pools do require resources such as servers and bandwidth to operate not to mention the manpower involved in maintaining the Bitcoin Pools, therefore most of them charge a small percentage of the Bitcoin produced as their fees. But I feel that Bitcoin Pools are a Win-Win situation unless you are a large Bitcoin Rig operator able to do Solo Mining with enough hashing power to produce the Bitcoins on a regular interval.

Friday, 20 April 2012

I have heard of Bitcoin miners specially turning on their Bitcoin Mining Rigs during Winter time to heat up their houses, no joke. This is how hot Bitcoin Mining can be. I am doing mining and I do know. Try running 4 GPU 6990 Radeon together in a Bitcoin Rig and you will see the heat. The heat can even melt the casing if you do not have proper cooling.

For large and concentrated Bitcoin Rigs, you basically need to customized a cooling system for the Bitcoin rigs. I am running a few Bitcoin Rigs and the heat is so much that I ended up putting the rigs in a datacenter with special cooling. It is costly, but as a geek into Bitcoin, I love Bitcoin Mining and costs is one factor, interest is the real thing

Wednesday, 18 April 2012

The Bitcoin has enjoyed a lot of attention and support just by looking at the difficulty in generating a Bitcoin. From the chart given by Bitcoin Difficulty SIPA, it can be seen that since Jan 11, it has increased from near zero at the start to more than a million in terms of difficulty.

Previously normal CPU was used in the mining when there are idle CPU cycles and Bitcoin miners do not use specialized mining equipment. But as the difficulty increases more and more, it was found that it was impossible to just use CPU for mining. But it was found that GPU such as Radeon 6990 etc was extremely efficient in the solving of Bitcoin algorithms and hence mining. Therefore specialized Bitcoin mining rigs full of GPUs are setup for mining purposes. Such GPUs generate a lot of heat and use up a lot of power, therefore one has to calculate the cost of power versus that of the cost of a Bitcoin. Basically you do not find anyone using CPU mining nowadays for Bitcoin.

When I first started, I do not have any knowledge on GPU etc, I used an online CPU Bitcoin generator.

It takes a very long time just to generate 0.00003073 Bitcoin using my CPU in 0.51 hours and mine was a six core new computer! It was running at 2 mhashes per second. But a cheap low end Radeon 5760 can easily generate 200+ mhashes per second, therefore why everyone switch to GPU mining.

Sunday, 15 April 2012

As we know, there will only be 21 million Bitcoins in the world. Suppose Bitcoins become popular all of a sudden, will there be enough Bitcoins to go around? I guess there is nothing to worry as Bitcoin's smallest denomination is 1 Satoshi which is 0.00000001 BTC, so we do have a lot of Bitcoins to go around should it get popular, and I certainly hope that it would. Based on 1 Satoshi, there will be theoretically 2.1 Billion Bitcoins of 1 Satoshi each. May not be enough to power a nation's economy but certainly enough as a transaction media on the Internet and virtual world.

I am thinking how nice will it be if the current popular games start to use Bitcoins and unified the virtual worlds instead of having so many different currencies such as WOW Gold, Linden Dollars etc. It will be a very good start in establishing the Bitcoin as the de facto currency in the virtual worlds. You do not have to be a very good programmers like those in charge of the Bitcoin project or a Billionaire to promote Bitcoins, give one or two Satoshi among your friends, ignite the curiosity in them and maybe one day we will have a real, popular online currency known as the Bitcoin.

Saturday, 14 April 2012

Bitcoins have a few hard rules that are consistently enforced and will not be changed no matter what. These are

1. A total of 21 million Bitcoins
2. Bitcoins can be divided into 8 decimal places
3. There may be zero or tiny amount of transaction fees

Bitcoin Client are maintained by volunteers. These developers are skillful and unpaid dedicated programmers maintaining Bitcoin Client at their own expenses and time. Bitcoins are normally released as the main release with beta releases for developers.

So we have our Electronic Wallet for Bitcoins, and given that the Bitcoin Faucet doesn't really give you much, actually just for playing around and if you need some more Bitcoins and are interested to explore mining some of the Bitcoins yourself, you will need to understand this.

You can see that the difficulty is 1577913, what does that mean for you. Difficulty times 2^32 (4,294,967,296) divides by your hash rates give you the average time to find a Bitcoin Block. Taking your Hash Rate as 1 Ghash/s which is not to be laughed at. 1,626,553 x 4,294,967,296 / 1,000,000,000 = 6,985,992 seconds = 80 days. It will take you 80 days to find a block of Bitcoins. At this moment, the number of coins in a block is 50 which is about US$250, meaning it takes you 80 days to earn $250, not to mention the electric bills and the costs of building a rig. There are two major methods, one is through building a rig using a mother board and GPUs, the other is using FPGA. GPU rigs are very power intensive and your power bills will be huge where FPGAs though aren't power intensive cost more than GPU rigs when you are buying them. So do you also need the patience to wait an average of 80 days? Not actually, there are mining pools which we will talk about later.

You may now have a question. Bitcoin is just a virtual currency, not being underwritten by any government, how do you know the Bitcoins in your electronic Bitcoin Wallet has value? Bitcoins value can be estimated from how much it can be exchanged for say US dollars. You can actually do the Bitcoin to US Dollar Exchange online. My link is only one of the many, there are even exchanges to exchange for Linden Dollars etc. It is a fairly fun and active market now here. Reason why I link to Mtgox is because at current they are the largest Bitcoin exchange and they do a brisk business exchanging dollars for Bitcoins and vice versa.

Friday, 13 April 2012

As in any innovative idea, there is always a niche community with similar likes promoting it. Bitcoin with its extremely diverse audience definitely need a location where one could chat about anything and everything under the Sun about Bitcoin. Exchanging ideas, announcing new technology or patches, buying and selling of Bitcoins or goods and services through Bitcoins or even general chat. Bitcointalk is definitely a good place to start with.

There is a lot of things to talk about Bitcoins, there are also a lot of interesting development on other similar type of coins as Bitcoins. Do join and participate in this interesting and fairly active community.

Wednesday, 11 April 2012

Bitcoin does have a price and also a way of conversion from Dollars and Sense of the real world to that of the virtual Bitcoin. One of the largest Bitcoin Markets are Mtgox. They list down the prices to be bought and sold and allow the transactions between buyers and sellers.

Tuesday, 10 April 2012

If you had read the previous post on the setup of the Bitcoin Client, you will also have your Bitcoin Wallet and Bitcoin Address now. The next thing is where to get some Bitcoin for your curiosity and also for testing. You can get some Bitcoins here. It isn't much, but it is a good practice for you to get some Bitcoins for your first time. After you add in your Bitcoin address and the necessary information, you will need to wait about 24 hours for the Bitcoin to arrive to you. Do remember to have your Bitcoin Client Sync so that the Bitcoins can be received. If you see a transaction with a minute amount of Bitcoin, you are Successful! Congratulations of being a First Time Bitcoin Owner!

Once you installed the Bitcoin Client which gives you the Bitcoin
wallet, you will notice that you have Bitcoin addresses such as:

With this address, other Bitcoin users can send Bitcoins to you for payment or you can get from others' their Bitcoin addresses and send Bitcoins to them for payment. For those doing Bitcoin mining, the Bitcoins that they mined also appear in this Bitcoin Client.

The Bitcoin needs a place to store and also a wallet to transact etc. This function is fulfilled by the Bitcoin Client. Download the Bitcoin Client, install it and you will have your own encrypted Wallet for Bitcoin storage and transactions. In order to install, first click on the Windows EXE installation if you are using Windows like me, or you can install other versions of Bitcoin running under Linux, Mac etc.

Once the installation completes

Save and install the file.

Answer the Installation Questions and Click Next.

Bitcoin will start running and begins to synchronize the Bitcoin Chains. You have completed the Installation of the Bitcoin Client.

Monday, 9 April 2012

You may wonder since Bitcoin is virtual, after mining, where does the Bitcoin goes or how do you know how many Bitcoins you have, how do you store the Bitcoin, how do you do transactions using Bitcoins. These are questions I was asking myself. It took me a lot of googling and actually trying out myself to find out. I am creating a small tutorial on this for my next blog post.

In the meantime, do enjoy some more of those Bitcoin Youtube on the mining aspects. For me as a technie, the most interesting part of Bitcoin is building a lovely rig. There are a lot of things to learn and I blow up a lot of components before getting them right.

Bitcoin are not minted by any governments, it is a virtual coin meaning that you are not going to see any physical coin. So how is it produced and how do you know it is of value? Bitcoin is "mined" by solving complicated algorithms so that "work" is done to produce the Bitcoins. The mining is done initially by normal computer with CPUs. But as the popularity of Bitcoins increase, there are more and more miners and hence the difficulties of producing the Bitcoins increased.

Bitcoins are so difficult to produce that normal computer CPU would take far too long to solve the algorithms and to produce the Bitcoins. Instead it was found that GPUs especially ATI GPUs having a lot of processor units inside each GPU is extremely suitable for the solving of such algorithms. Mining Rigs with multiple GPUs in each rig are constructed for the "mining" of Bitcoins instead.

GPUs consumed a huge amount of power and produce a tremendous amount of heat. Mining Bitcoins aren't cheap considering the amount of power needed to power the GPUs and to cool the GPUs. There is an interest towards producing FPGA specializing in the solving of the Bitcoin algorithms. As the FPGAs get more powerful, it is hopeful that some Bitcoin mining be taken over by the FPGA which is more expensive but cost less to run due to the much lesser power required.

Sunday, 8 April 2012

Bitcoin was invented by Mr Satoshi Nakamoto. Whether if this is his actual name remains unknown. There is no attempt by the founder to come out into the open. No one knows for sure who he is. There is a lot of investigative works and guesses about his identity, but that's about it. No one really comes close to identifying him.

He wrote a non peer review paper on Bit Coin.
This was the origins of the Bitcoin project. From his papers, bitcoin
client which allows for the creation of Bitcoin wallets to store and do
transactions with Bitcoins as well as huge mining rigs for Bit Coin
mining was setup. He remains a mystery but his Bit Coin was spreading throughout the world. It isn't really wide spread but still the niche size of those interested in Bit Coin is quite large and a lot of money was also spend on specialized mining rigs to generate Bit Coins.

I think not many people know what is a Bitcoin unless you are inside the very small community. Bitcoin is virtual, there is no physical coins to represent a Bitcoin. Bitcoin is not minted by any government or authority. It is generated by powerful computers solving complicated algorithms. Curious isn't it? Bitcoin is not imaginary. Even though it is no physical but virtual but it does command a value. At the moment, one Bitcoin is equal to nearly US$5. I am starting this blog because of my interest in Bitcoin. I am also like you, just found out about this amazing currency and trying to learn about it. I hope to learn about Bitcoin and also hope that you will follow me as I continue my journey of Bitcoin.